Since 2000, financial services giant Vanguard has published an annual study titled "How America Saves." Based on data of $ 1.2 trillion in assets, which is owned by nearly 5 million retirees in defined contribution plans managed by Vanguard, this report provides a tremendous amount of insight into how millions of people save on retirement.
Unfortunately How America Saves 2018 shows that in the last decade fewer young workers contributed to their retirement assets in 2016 or 2017 than in any other year. Combine this with the fact that young workers contribute a lower percentage of their income than any other demographic, and it means that millions of Americans will retire with too little money to enjoy the quality of life they desire.
In short, millions of Americans are still wrong when it comes to saving for retirement.
What Vanguard reports
In recent years, the proportion of young workers saved for retirement has declined. Of those under 25 years of age, only 42% contributed to their company's retirement savings in 2017 and 2016, the lowest rate in over a decade. In contrast, in 2017, 70% of employees between 25 and 34 contributed, although this was the second lowest rate since 2013.
The trend applies to all other age groups, with participation decreasing in recent years:  Age reduction rate by age
Not only the low participation rate of young workers is a problem. Young workers also contribute to the lowest percentage of their earnings:
|Age||Percentage of earnings *|
The evidence lies in the balance sheets (or their absence)
Here's how much Vanguard says people have in their retirement accounts at different ages:
|Age||Median Balance||$ 25,834|
|55-65  $ 71,105|
Simply put, that's not enough to replace the income you lose when you retire. The $ 71,105 median, which is between 55 and 64, would only be $ 2,844 a year in retirement income under the 4 percent rule. Since social security pays the average pensioner only $ 16,932 per year, most people need other sources of funding to bridge the gap.
Many people have other retirement pensions, but the average salaries are usually far below those that need to be most balanced income that they lose when they retire. According to a 2015 Employee Benefit Research Institute study, the median age between the ages of 60 and 64 in a Roth IRA was $ 21,238. it was $ 51,731 in a traditional IRA and $ 81,942 in a rollover IRA. That's $ 850, $ 2,069 and $ 3,278 a year for sustainable income.
And this is for people who actually participate in a retirement plan . According to How America saves in 2018 about a quarter of people make no contribution to their employer's defined-contribution pension plan. Other research indicates that almost one in three Americans does not save for retirement, and most of them will never do it. According to the Social Security Administration, 23% of married filmmakers and 43% of unmarried filers expect to receive at least 90% of their income from social security .
You can avoid a pension disaster
America's youngest workers are the highest educated generation in history, but How America Saves 2018 makes it clear that many are making the same retirement mistakes as previous generations: not saving enough and not starting as early as possible. Social security risk is offset by the waste of social security contributions in 2034, and the "fix" could also include lower social benefits for today's workers when they retire.
So, what saves a worker for retirement? do? In short, find a way to increase your contributions. Whether you are still decades of retirement or decades in your career and closer to retirement than you would like to admit, the problem will only get worse if you continue it.